Padgett Stratemann is now RMSAs San Antonio becomes a bigger player in Texas Business, more national firms are entering this market. A national firm does not start from zero. RMS (http://rsmus.com/) purchased Padgett. This gives the buyer a large client base to start with. Typically the local partners have made a handsome profit on their time at the firm. But seeking to recoup the investment, the buyer typically raises fees knowing some business will be lost. RMS has re located from North Loop 410 to 1604 and 281. Renee Foshee, a tax expert with the firm, is the current SA CPA Society President.

Turner Cleveland PCTerry Cleveland has addressed our students. Two of our graduates are employed with at this firm.

Ridout Barrett CPAsTony Ridout has visited and addressed our students many times. We have placed graduates with Ridout for several years.

Financial Consulting Firms

Aventine Hill Partners, Inc.Beth Hair CEO founded Aventine in San Antonio in 2009. The firm now has offices in Dallas, Austin, San Antonio, and Houston. She formerly was with RGP.

Resource Global ProfessionalsSusan Hough has been to campus and spoken to our students. She is the San Antonio Manager of RGP. RGP and Aventine are not CPA firms. Instead they offer contract specialists for firms needing specific tasks such as compliance or Controllerships.

Accounting Information

Acounting Today This is an independent site for accounting news regarding firms and current issues.

Accounting Certifications

Certified Information Systems Auditor CISANow that everything is literally on the computer and cyber security becomes a prominent issue, I see more and more accounting professionals with this designation. Previously known as the Information Systems and Audit Control Association, it now goes by the acronym ISACA.

Geo Politics

Institute for the Study of WarThe Institute for the Study of War advances an informed understanding of military affairs through reliable research, trusted analysis, and innovative education. We are committed to improving the nation’s ability to execute military operations and respond to emerging threats in order to achieve U.S. strategic objectives. ISW is a non-partisan, non-profit, public policy research organization.

StratforThis Austin, TX based site was begun by an ex Texas State Professor.

Socionomics

April 28, 2007

Matt Moore found the Mike Milken page which is at www.mikemilken.com. He glosses over his role as a junk bond manipulator. This was a unique time in corporate history when raiders could get the money they neede without going to a bank or insurance company. Here is the condensed story for example of what happened to Gulf Oil courtesy of wikipedia.

By 1980, Gulf exhibited many of the characteristics of a giant corporation that had lost its way. It had a huge but poorly performing asset portfolio, associated with a depressed share price. The stock market value of Gulf started to drop below the break-up value of its assets. Such a situation was bound to attract the interest of corporate raiders.

Its undoing as an independent company began in 1982 when T. Boone Pickens [17] , an Amarillo, Texas oilman and corporate raider (or greenmailer), and owner of Mesa Petroleum made an offer for the much larger Cities Service Company from Tulsa, Oklahoma. Gulf offered to be a white knight and take over Cities Service (more generally known by the name Citgo) to keep them out of the clutches of Mesa. Gulf terminated the Cities Service acquisition over a dispute regarding accuracy of Cities Service's reserves and Cities Service was ultimately sold to Occidental Petroleum, and the retail operations were resold to Southland Corporation, the operators of 7-Eleven stores.[18] Gulf's termination of the Cities Service acquisition resulted in more than 15 years of shareholder litigation against Gulf (and later Chevron).[19]

Mesa and a group of associated investors then turned on Gulf. They quickly acquired 11% of the company's stock and engaged in a proxy war to get control of its board. Pickens made loud criticisms of the existing Gulf management and offered an alternative business plan intended to release shareholder value through a drastic slimming down of the Gulf operation. Pickens had acquired the reputation of being a corporate raider whose skill lay in making profits out of bidding for companies but without actually acquiring them. During the early 1980s alone, he made failed bids for Cities Services, General American Oil, Gulf, Phillips Petroleum and Unocal. The process of making such bids would promote a frenzy of asset divestment and debt reduction in the target companies. This is a standard defensive tactic calculated to boost the current share price—but possibly at the expense of long term strategic advantage. The target shares would rise sharply in price, at which point Pickens would dispose of his interest at a substantial profit.[20]

Gulf management and directors took the view that the Mesa bid represented an undervaluation of the Gulf business as a going concern and that it was not in the interest of Gulf shareholders. Gulf therefore sought to resist Pickens by various means, finally turning to Chevron to act as their white knight in 1984. Gulf divested many of its worldwide operating subsidiaries then merged with Chevron. The Mesa group of investors were reported to have made a $760m profit when they assigned their Gulf shares to Chevron.

The forced merger of Gulf and Chevron was a controversy that was widely discussed and was referred to the Federal Trade Commission (FTC). The FTC only approved the deal subject to strict conditions.[21] Never before had a "small operator" successfully taken apart a Fortune 500 company. The $13bn merger with Chevron would become the largest corporate merger in world history up to that time and at 2006 it still remains the second largest.[22] Chevron, to settle with the government antitrust requirements, sold some Gulf stations, a refinery in the eastern United States and some international operations variously to British Petroleum (BP) and Cumberland Farms in 1985.

Now, as Paul Harvey says, the rest of the story. When Pickens et al attempted to take over a company, the comapny immediately went into freeze mode or like Gulf turned to a White Knight. The White Knight was only white insofar as the execs made a lot of money on the buy out of their stock or hastily awareded stock options. For example, when Pickens group announced Phillips as a target, plans for shopping malls in Phillips home town of Bartels ville was canceled.

I happend to be witness to the situation at Gulf. The largest domestic oil field Gulf had was in Goldsmith TX between Odessa and Andrews, TX. Our small family owned company furnished maintenance services for that producing field. This made a living or business for hundreds of Gulf employees and contractors and their employees. Gulf stock had been trading at $30 a share forever. AS the article says, Gulf thought the bid by Pickens undervalued the company but they the directors certainly never got the stock over 40 bucks. Terrified that Pickens would fire all of them, they turned to Chevron. Chevron made the high bid of $80. Pickens et al made a fortune. I should have bought a jillion Gulf call options but did not. The result of course was that Chevron did what they have done with each purchse of Texaco, Gulf, and Unocal, they fired or transferred or retired all the Gulf employees. They fired or made the contractors bid for the work. The only ones that stayed bid at or below cost putting many out of business in a year or so. This of course helped Chevron recover their cost more quickly. We were out of business in short order. This is when operating a debt free business with plenty of cash in the bank pays off. Our employees of course were hard pressed to find similar work for similar pay. A huge recession ensued in the Permian Basin as oil prices plunged to $12. Thousands left the area never to return. I finally did that when oil went back to $12 in 1998.

Milken was able to raise money for just about anything for a while based on the takeover possibliities of a corporation. He and a few cronies like Pickens made a lot of money but tens of thousands of folks lost their jobs. I will grant that as the article says, when the stock dropped below break up value, someone would have taken Gulf over anyway, but it did not have to end so violently for all the innocent people who were guilty of doing nothing more than working hard and honestly every day, rather like the Arthur Andersen fiasco.

April 27, 2007

As you know I have been predicting worse than expected consequences from the real estate fallout. Here is a Forbes article showing just how much the housing slowdown is affecting the overall economy. I also read that home problems cause consumers to be averse to buying new cars, so the ripple is spreading, hmmm, boats too.

Meanwhile here is another lesson that earnings count. Captial One Bank stock fell about 6% friday as the firm missed its earnings estimate. Oh it still made lots of money, just not as much as expected. The fallout continues. The lesson here is that in my lifetime there is rarely a 'soft landing' from a hard fallout in the economy.

Marvin Olasky weighs in with this article. He points out that Halberstam was old journalism in which an icon spoke of what was/is happening. Now with blogs, everyone can be a journalist, where will this take us-to a new empowerment or just more fractional polarizing squabbling?

Michael Young is the Editor of a newspaper in Lebanon. Remember what I said about reading opinions outside the US. His article on Halberstam suggests the same as Olasky's, the world has changed and perhaps the passing of Halberstam, is yet another signpost along that journey.

April 26, 2007

Boeing now declares itself to be a technology company. The 787 Dreamliner will be assembled around the world and brought in by 747s. The plane will cost a cool $150M so cost control is important. This is yet another article illustrating globalization and managing costs, something we study in several cost courses. One can also see the growing necessity of universal international accounting standards which we have discussed in Intermediate accounting.

And so we come to the end of another semester. Most of you are, thanks to years and years of multiple choice enforced testing, focused only on your grade on the next test. This of course is a mistake. You are looking down, look up. X years from now no one is going to ask what grade you made in Economics 2356. They will however judge you on your

Ability to connect with the business environment

Ability to get to the point

Ability to make a presentation

I am amazed at how many of you blithely say that you don't have time to do, well, any better than you are doing, on a presentaiton. Here we have had all semester to prepare. ON the job it will simply be expected. Oh well, I warned you.

I have seen two effective presentations. With one to two classes left in the semester, I hope to see at least two more. The effective ones were highlighted wtih a good use of points, a summary of the story or book, and then a discussion of why this was important. I mentioned several points about presentations on my post before spring break.

In the fourth installment of Star Wars, actually the second release, Skywalker is sent for tutoring by Yoda. Weary of Skywalker's half hearted attempts, Yoda finally says

David Halberstam was killed in a car crash this week at age 73. While it has been said that many live through history without understanding the changes around them, Halberstam certainly labored to chronicle them. His The Best and The Brightestis still the classic on how the US went wrong in Viet Nam. His one work that I am most familiar with is the landmark The Fiftys. PBS made this into a multi part series for television. It is a revealing look at how the real seeds of change for the latter half of the century were laid in that 'quiet' Eisenhower era. I know watching the series made me think about that era, that I lived through as a very young child, in a whole new perspective.

We never know what will happen to us. And on this day Halberstam was still going, making speeches and on his way to do an interview for his latest book. And then, kaput, in a single thoughtless instant, some fool no doubt talking on a cell phone and attempting to drive, whatever, certainly not paying attention to driving, the car Halberstam was in was t boned in an intersection. Like Patton, all that war and then killed in a car wreck.

Check it out, Halberstam was an author of statuture for the last fifty years.

This article is a good example of the movies and book on your review list. The article concerns Mike Milken's Global Investment Conference. This tenth annual event has gathered the most powerful hedge fund managers in the business. Now consider the cast of characters.

This is the Mike Milken that used to run Drexel Burnham's junk bond desk. That would be the junk bond empire that allowed Boone Pickens et al to terrorize oil companies into green mailing them to go away.

That would be the Mike Milken that foolishly rejected a misdemeanor charge and ended up going to jail for two felonies, courtesy of the federal prosecutor at the time, one Rudy Guliani, later NYC mayor and now Presidential candidate. By the way, they are good friends now.

The details of Milken are in Den of Theives and the movie Wall Street was based on that story.

The KKR RJR Nabisco deal mentioned in the story is the plotline for Barbarians at the Gates.

Milken made some $500 M personally his last year at Drexel, gee, guess who is back at the center of the investment world.

George Will tends to multiple syllables to make his point but is usually a good read. Here he reviews a book that asks whether we are not being naive in assuming that because a few Chinese are enjoying capitalism, eveyrone will enjoy it. As the writer remarks, visitors return from China remarking on the absence of flies, not the absence of freedom. Will makes the point that the next Olympics will be in Bejing, the most important since the 1936 games in Berlin. Indeed, just because they drink Starbucks coffee and munch on a Big Mac, are they really going to demand more freedom. Unless the Chinese citizens starts demanding it, the Chinese government is not likely to start granting it.

April 25, 2007

At the end of Men in Black, the young lady remarks that Tommy Lee Jones and Will Smith certainly have unusual jobs. Here is a story on truning the hobby into a business. And isn't that what we all want to do? Yep, it is time share for exotic car drivers. I know I would sign up! This idea has extended to airplanes with Netjets and yachts with The Moorings. And of course time share with condos has been around for a while. This idea with exotic cars actually makes a lot of sense to me as they are not daily drivers anyway, if you could drive on protected course, so much the better.

Okay, any creative ideas on new businesses out there? HOw would you use teh CVP techniques we learned in class to insure a profit?